I'm the Director of Sportsimpacts and an Economics Professor at the George Herbert Walker School of Business at Webster University in St Louis, MO.
I've conducted research at Super Bowls, Final Fours, All-Star Games, Ryder Cups, and numerous Division I NCAA Championship events.
www.sportsimpacts.net
www.webster.edu/business/depts/

Be as amazing in 2013 as you’ve been during the prior 2 seasons, and become the wealthiest pitchers in baseball’s history.

That is what’s on the line for Detroit Tigers pitcher Justin Verlander and Los Angeles Dodgers pitcher Clayton Kershaw, thanks in very large part to Seattle Mariners pitcher Felix Hernandez.

It is being reported by multiple sources (here and here for example) that Mr. Hernandez will sign a 5-year $135.5 million extension onto the 2 years and $39.5 million he is owed for the 2013 and 2014 seasons.

This implies that his total contract value between now and 2019 is $175 million, or a $17.5 million average. Over the 5 extension years, the average salary is actually $27.1 million…highest in history for a pitcher’s multi-year contract.

Justin V and Clayton K, HELLO!

Mr. Verlander signed a 5-year, $80 million deal in 2010 according to Spotrac…an average of $16 million over the life of the deal, with $20.1 million forthcoming in 2013 and 2014. He will be an unrestricted free agent after the 2014 season.

Just as Super Bowl XLVII MVP Joe Flacco likely moved himself much closer (if not into) the same financial neighborhood as Drew Brees and Peyton Manning with his 11 TDs/zero interceptions performance during the 2012 post-season, Mr. Verlander and Mr. Kershaw will likely become neighbors to Mr. Hernandez in the near future.

Upon reviewing numerous basic and advanced pitching statistics from 2012 and 2011, it seems quite clear that Verlander and Kershaw are among a short list of elite pitchers in the game.

Perhaps the BEST two pitchers in the game.

Just focusing on WAR for pitchers and WHIP (walks and hits per inning), they finished:

Justin Verlander May Soon be Celebrating His Ascension as Baseball's Highest Paid Pitcher

- 2nd/6th in 2011 WAR, and 1st/2nd in 2011 WHIP (Verlander/Kershaw);

- 1st/3rd in 2012 WAR, and 5th/2nd in 2012 WHIP (Verlander/Kershaw).

King Felix has not ranked in the top 10 of both key statistics since winning the American League Cy Young Award in 2010.

In short, expect Mr. Verlander and Mr. Kershaw to break the bank – along with some salary records – as long as their 2013 performance doesn’t fall off the charts like an Adam Wainwright curve ball.

The Dodgers clearly are in the best position to afford such expenditures in light of a reported $8 billion, 25-year deal with Time Warner Cable, though how much of those revenues will be subject to baseball’s revenue sharing plan is still unclear.

The Tigers reportedly earn approximately $40 million annually from Fox Sports Detroit, which according to this Detroit-based article is unlikely to be renegotiated until 2022. Conversely, the Mariners – who signed a 10-year, $450 million deal in 2007 – have an opt out clause after the 2015 season. Forbes quotes experts who estimate that the Mariners could secure $70 million annually in renegotiation talks.

This perhaps illuminates why the Mariners chose to re-sign one of baseball’s best pitchers to one of baseball’s most anemic teams.

A failure to make a long-term deal with the team’s best player would further alienate paying and viewing fans, and thus, would likely reduce the value of the media rights when they come up for discussion in 2015.

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